Tall Drink of Water pet supplies business plan financial plan. Tall Drink of Water designs and sells elevated pet feeders in a number of styles to pet care professionals, government agencies, and the public.

Tall Drink of Water

Pet Supplies Business Plan

Financial Plan

We expect sales growth will be slow to moderate, and that cash flows will be steady with annual sales projected to equal $143,800, $223,180 and $248,748 for the years 2005 – 2007.

Once the company reaches a sufficient level of profitability and accumulates a cash reserve, it plans to invest 50% of profits in research and development of new products, existing product and operational improvements, and to expand marketing and sales efforts to foreign markets. 38% of profits will be invested in low risk financial instruments. 10% of profits will be used for employee bonuses. 1% of profits will be used to support non-profit organizations that support the health and welfare of women in the United States. The remaining 1% will be used to support non-profit organizations that promote the health and welfare of pets in the United States. These expenses will be itemized in the later years of the business plans.

In the event that the company does not earn a profit, additional funds will be sought to finance research and development (R&D) activities. 100% of funding obtained during break-even or loss periods will be used for R&D, while the investment in financial instruments, employee bonuses and charitable giving activities will be foregone.

8.1 General Assumptions

The general assumptions for this plan are shown in the following table.

General Assumptions

Year 1

Year 2

Year 3

Plan Month

1

2

3

Current Interest Rate

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

30.00%

30.00%

30.00%

Other

0

0

0

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8.2 Break-even Analysis

The following break-even analysis table and chart show that with average estimated monthly fixed cost of $7,325 and a 28% variable cost, the company needs to generate approximately $10,000 in sales to break even.

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8.3 Projected Profit and Loss

We will operate at a profit beginning in the first year based on our worst case sales forecasts. Though we project that we will operate at a loss for the first six months, we will make up for the losses in the second half of 2005 to break even for the year. We also anticipate earning a profit in subsequent years. These projections are conservatively based on solid market research and initial responses from local pet care professionals.

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8.4 Projected Cash Flow

The cash flow table shows that cash flow for our worst case sales scenario (i.e., slow sales for the first three years) provides steady cash balance increases. Once the loan is fully repaid, the cash balance should provide a cushion for future expenses.

The cash flow chart shows monthly projections for 2005.

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8.5 Projected Balance Sheet

Our projected balance sheet is shown in the following table. Monthly projections are shown in the appendix. The Balance Sheet, even with these conservative forecasts, shows a steadily increasing net worth.

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

Current Assets

Cash

$70,466

$24,702

$27,398

Accounts Receivable

$61,060

$94,766

$105,623

Inventory

$13,310

$22,568

$24,404

Other Current Assets

$0

$0

$0

Total Current Assets

$144,836

$142,037

$157,425

Long-term Assets

Long-term Assets

$0

$0

$0

Accumulated Depreciation

$0

$0

$0

Total Long-term Assets

$0

$0

$0

Total Assets

$144,836

$142,037

$157,425

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities

Accounts Payable

$26,422

$11,539

$11,973

Current Borrowing

$40,040

$30,080

$20,120

Other Current Liabilities

$0

$0

$0

Subtotal Current Liabilities

$66,462

$41,619

$32,093

Long-term Liabilities

$0

$0

$0

Total Liabilities

$66,462

$41,619

$32,093

Paid-in Capital

$97,200

$97,200

$97,200

Retained Earnings

($31,200)

($18,826)

$3,217

Earnings

$12,374

$22,044

$24,915

Total Capital

$78,374

$100,417

$125,332

Total Liabilities and Capital

$144,836

$142,037

$157,425

Net Worth

$78,374

$100,417

$125,332

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8.6 Business Ratios

The following table outlines some of the more important ratios from the Pet Supplies industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5999.1103.

Our asset ratios differ from the industry standard for two reasons:

Because we are operating initially as a home office with outsourced manufacturing, we do not require any long-term assets at this stage.

Because our first sales approaches are to other professionals and the government, rather than to individual consumers, we have a higher percentage of assets as accounts receivable.

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Tall Drink of Water pet supplies business plan financial plan. Tall Drink of Water designs and sells elevated pet feeders in a number of styles to pet care professionals, government agencies, and the public.